European Commission slashes Greek growth target from 2.5% to 0.5%

As a pedestrian walks past a drawing of Greek Prime Minister Alexis Tsipras portrayed as Christ, Greece has entered into a fresh round of debt talks with its creditors(Reuters)

The European Commission (EC) has revised Greece's economic growth forecast to 0.5% in 2015, down from an earlier prediction of 2.5%.

"The positive momentum, however, has been hurt by uncertainty since the announcement of snap elections in December," the EC said.

"The current lack of clarity on the policy stance of the government vis-à-vis the country's policy commitments in the context of the EU/IMF support arrangements worsens uncertainty further."

Greece has entered into a fresh round of debt talks with its creditors as it seeks to extend its bailout and stave off a default.

Greek Finance Minister Yanis Varoufakis, who was recently relegated from Greece's front line bailout negotiating team, is due to meet with EC officials on 5 May.

Athens is due to make two major payments to its creditors in May amid expectations it might struggle to make the payments without a fresh injection of cash.

Germany powering European recovery

For the Eurozone as a whole, the EC revised its growth prediction up 0.2% and it now expects 1.5% growth in 2015.

Faster economic growth would help boost inflation across the eurozone, the report said, while unemployment would also likely fall.

"The European economy is enjoying its brightest spring in several years, with the upturn supported by both external factors and policy measures that are beginning to bear fruit," siad Pierre Moscovici, EU commissioner for economic affairs. "But more needs to be done to ensure this recovery is more than seasonal."

Europe's biggest economy has been the driving force behind the improved growth outlook. German gross domestic product is expected to expand by 1.9% in 2015, the EC said, with economic growth set to reach 2% in 2016.